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Laws to improve prompt payment about to take effect - Law Times

A recent article in Law Times looks at the reforms being made to the construction law in Ontario that will create a prompt payment regime, require the mandatory adjudication of certain construction disputes and implement various technical amendments to modernize the Construction Lien Act. The vast majority of the reforms will take effect in two stages. According to author Shannon Kari, stage one comes into force on July 1, and stage two, which is aimed at reducing costly payment disputes through mandatory interim adjudication, will become law in the fall of 2019. The Act will be renamed the Construction Act, reflecting the changing nature of the legislation that expands beyond traditional construction liens.

“Now that the government has set out the policies and general rules, it will be up to the private and public sectors to adjust their processes,” says Richard. “July 1 is soon. Within an organization, you will have business units that must co-ordinate their payment processes. As an industry, these changes will help get the cash moving. That is generally a good thing as long as rights are not prejudiced.”

Richard also discusses the new measures that expressly permit alternative forms of holdback and the regulations’ requirement of a “surety bond” for public projects of more than $250,000 in value to ensure contractor performance. He also comments on grandfathering provisions in the new legislation related to procurement and contracts. “If you have commenced the procurement process, the contract is also grandfathered,” says Richard. “The section of the bill talks about it being commenced, so it will be necessary to ensure there is clarity in the documents themselves to put the bidders on notice,” he explains.

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